The Confiscation of Bank Savings to “Save the Banks”: The Diabolical Bank “Bail-In” Proposal

The Crisis in Greece: Will it result in a Haircut “Bail-in” as applied in 2013 in Cyprus? 
This article was first published by Global Research in April 2013. 
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Is the Cyprus Bank “Bail-in” a “dress rehearsal” for things to come?
Is  a “Savings Heist” in the European Union and North America envisaged which could result in the outright confiscation of bank deposits?
In Cyprus, the entire payments system has been disrupted leading to the demise of the real economy.
Pensions and wages are no longer paid. Purchasing power has collapsed.
The population is impoverished.
Small and medium sized enterprises are spearheaded into bankruptcy.
Cyprus is a country with a population of one million.
What would happen if similar ‘hair cut” procedures were to be applied in the U.S. or the European Union?
According to the Washington based Institute of International Finance (IIF) (right) which represents the consensus of the global financial establishment, “the Cyprus approach of hitting depositors and creditors when banks fail, would likely become a model for dealing with collapses elsewhere in Europe.” (Economic Times, March 27, 2013).
It should be understood that prior to the Cyprus onslaught, the confiscation of bank deposits had been contemplated in several countries. Moreover, the powerful financial actors who triggered the bank crisis in Cyprus, are also the architects of  the socially devastating austerity measures imposed in the European Union and North America.
Does Cyprus constitute a “model” or scenario?
Are there “lessons to be learned” by these powerful financial actors, to be applied elsewhere, at some later stage, in the Eurozone’s banking landscape?
According to the Institute of International Finance (IIF), “hitting depositors” could become the “new normal” of this diabolical project, serving the interests of the global financial conglomerates.
This new normal is endorsed by the IMF and the European Central Bank.  According to the IIF which constitutes the banking elites mouthpiece,  “Investors would be well advised to see the outcome of Cyprus… as a reflection of how future stresses will be handled.”  (quoted in Economic Times, March 27, 2013)
“Financial Cleansing”. Bail-ins in the US and Britain

What is at stake is a process of  “financial cleansing” whereby the “too big to fail banks” in Europe and North America (e.g. Citi, JPMorgan Chase, Goldman Sachs, et al ) displace and destroy lesser financial institutions, with a view to eventually taking over the entire “banking landscape”.
The underlying tendency at the national and global levels is towards the centralization and concentration of bank power, while leading to the dramatic slump of the real economy.
Bail ins have been envisaged in numerous countries. In New Zealand  a “haircut plan”   was envisaged as early as 1997 coinciding with Asian financial crisis.
There are provisions in both the UK and the US pertaining to the confiscation of bank deposits.  In a joint document of the Federal Deposit Insurance Corporation (FDIC) and the Bank of England, entitled Resolving Globally Active, Systemically Important, Financial Institutions, explicit  procedures were put forth whereby “the original creditors of the failed company “, meaning the depositors of  a failed bank, would be converted into “equity”. (See Ellen Brown, It Can Happen Here: The Bank Confiscation Scheme for US and UK Depositors,Global Research, March 2013)
What this means is that the money confiscated from bank accounts would be used to meet the failed bank’s financial obligations. In return, the holders of the confiscated bank deposits would become stockholders in a failed financial institution on the verge of bankruptcy.
Bank savings would be transformed overnight into an illusive concept of capital ownership. The confiscation of savings would be adopted under the disguise of  a bogus “compensation” in terms of equity.
What is envisaged is the application of  a selective process of  confiscation of bank deposits, with a view to collecting debt while also triggering the demise of “weaker” financial institutions. In the US, the procedure would bypass the provisions of the Federal Deposit Insurance Corporation (FDIC) which insures deposit holders against bank failures:

No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks.  The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .” The only  mention of “insured deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to say is inadequate, implying that it needs to be modified or overridden. (Ibid)

Because depositors are provided with a bogus compensation, they are not eligible to the FDIC deposit insurance.
Canada’s Deposit Confiscation Proposal
The most candid statement of confiscation of bank deposits as a means to “saving the banks” is formulated in a recently released document of the Canadian government entitled “Jobs, Growth and Long Term Prosperity: Economic Action Plan 2013″. 
The latter was submitted to the House of Commons by Canada’s Minister of Finance Jim Flaherty on March 21 as part of a so-called “pre-budget” proposal.
A short section of the 400 report entitled “Risk Management Framework for Domestic Systemically Important Banks” identifies bail-in procedure for Canada’s chartered banks. The word confiscation is not mentioned. Financial jargon serves to obfuscate the real intent which essentially consists in stealing people’s savings.
Under the Canadian “Risk Management” project:

 The Government proposes to implement a ‘bail-in’ regime for systemically important banks.

 This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital.”

This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada.

What this signifies is that if one or more banks (or credit unions) were obliged to “systemically deplete their capital” to meet the demands of their creditors, the banks would be recapitalized through “the conversion of certain bank liabilities into regulatory capital.” 
The  “certain bank liabilities” pertains (in technical jargon) to the money they owe their customers, namely to their depositors, whose bank accounts would be confiscated in exchange for shares (equity) in a “failing” banking institution.
“This will reduce risks for taxpayers” is a nonsensical statement. What this really means is that the government will not provide funding to compensate depositors who are victims of a failed banking institution, nor will it come to rescue of the failed institution.
Instead the depositors will be obliged to give up their savings. The money confiscated will then be used by the bank to meet their liabilities contracted with major financial creditor institutions. In other words, this entire scheme is “a safety net” for too big to fail banks, a mechanism which enables them as creditors to overshadow lesser banking institutions including credit unions, while precipitating either their collapse or their takeover.
Canada’s Financial Landscape
The Risk Management Bail in initiative is of crucial significance for Canadians across the land: once it is adopted by the House of Commons as part of the budget package, the Bail-in procedures could be applied.
The Conservative government has a parliamentary majority. There is a good likelihood that the Economic Action Plan 2013″  which includes the Bail-in procedure will be adopted.
While Canada’s Risk Management Framework intimates that Canada’s banks “are at risk”, particularly those which have accumulated large debts (as a result of derivative losses), a generalised across the board application of the “Bail in” is not contemplated.
The likely scenario in the foreseeable future is that Canada’s “big five” banks, Royal Bank of Canada, TD Canada Trust, Scotiabank, Bank of Montreal and CIBC (all of which have powerful affiliates operating in the US financial landscape) will consolidate their position at the expense of  lesser (provincial level) banks and financial institutions.
The Government document intimates that the Bail-in could be used selectively “in the unlikely event that one [bank] becomes non-viable.” What this suggests is that at least one or more of  Canada’s  “lesser banks” could be the object of a bail-in. Such a procedure would inevitably lead  to a greater concentration of bank capital in Canada, to the benefit of the larger financial conglomerates.
Displacement of Provincial Level Credit Unions and Cooperative Banks
There is an important network of over 300 provincial level credit unions and cooperative banks including the powerful Desjardins network in Quebec, the Vancouver City Savings Credit Union (Vancity) and the Coastal Capital Savings in British Columbia, Servus in Alberta, Meridian in Ontario, the caisses populaires in Ontario (affiliated to Desjardins), among many others, which could be the target of selective “Bail-in” operations.
In this context, what is likely to occur is a significant weakening of provincial level cooperative financial institutions, which  have a governance relationship to their members (including representative councils) and which, in the present context, offer an alternative to the Big Five chartered banks. According to recent data, there are more than 300 credit unions and caisses populaires in Canada which are members of  the “Credit Union Central of Canada”.
New Normal: International Standards Governing the Confiscation of Bank Deposits
Canada’s Economic Action Plan 2013″  acknowledges that the proposed Bail-in framework “will be consistent with reforms in other countries and key international standards”. Namely, the proposed pattern of confiscating bank deposits as described in the Canadian government document is consistent with the model contemplated in the US and the European Union.  This model is currently a “talking point” (behind closed doors) at various international venues regrouping central bank governors and finance ministers.
The regulatory agency involved in these multilateral consultations is the Financial Stability Board (FSB) based in Basel, Switzerland and hosted by the Bank for International Settlements (BIS) (image right). The FSB  happens to be chaired by the governor of the Bank of Canada, Mark Carney, who was recently appointed by the British government to head the Bank of England starting in June 2013.
Mark Carney, as Governor of the Bank of Canada, was instrumental in shaping the provisions of the Bail-in for Canada’s chartered banks. Before his career in central banking, he was a senior executive at Goldman Sachs, which has played a behind the scenes role in the implementation of the bank bailouts and austerity measures in the EU.
The FSB’s mandate would be to coordinate the bail-in procedures, in liaison with the “national financial authorities” and “international standard setting bodies” which include the IMF and the BIS. It should come as no surprise: the deposit confiscation procedures in the UK, the US and Canada examined above are remarkably similar.
Bank “Bail-ins” vs. Bank “Bail-outs”
The bailouts are “rescue packages” whereby the government allocates a significant portion of State revenues in favor of failed financial institutions. The money is channeled from the coffers of the State to the banking conglomerates.
In the US in 2008-2009, a total of $1.45 trillion was channeled to Wall Street financial institutions as part of the Bush and Obama rescue packages.
These bailouts were considered as a De facto government expenditure category. They required the implementation of austerity measures. Together with massive hikes in military expenditure, the bailouts were financed through drastic cuts in social programs including Medicare, Medicaid and Social Security.
In contrast to the Bailout, which is funded from the public purse, the “Bail-in” requires the (in-house) confiscation of bank deposits. The bail-ins are implemented without the use of public funds. The regulatory mechanism is established by the central bank.
At the outset of Obama’s first term in January 2009, a bank bailout of the order of $750 billion was announced by Obama, which was added on to the 700 billion dollar bailout money allocated by the outgoing Bush administration under the Troubled Assets Relief Program (TARP).
The total of both programs was a staggering 1.45 trillion dollars to be financed by the US Treasury. (It should be understood that the actual amount of cash financial “aid” to the banks was significantly larger than $1.45 trillion. In addition to this amount defence allocations to fund Obama’s war economy (FY 2010) was a staggering $739 billion. Namely the bank bailouts plus defence combined ($2189 billion) eat up almost the totality of the federal revenues which in FY 2010 amounted to $2381 billion.
Concluding remarks
What is occurring is that the bank bailouts are no longer functional. At the outset of Obama’s Second term, the coffers of the state are empty. The austerity measures have reached a deadlock.
The bank bail-ins are now being contemplated instead of  the “bank bailouts”.
The lower and middle income groups which are invariably indebted will not be the main target. The appropriation of bank deposits would essentially target the upper middle and upper income groups which have significant bank deposits. The second target will be the bank accounts of small and medium sized firms.
This transition is part of the evolution of the global economic crisis and the impasse underlying the application of the austerity measures.
The purpose of the global financial actors is to wipe out competitors, consolidate and centralize bank power and exert an overriding control over the real economy, the institutions of government and the military.
Even if the bail-ins were to be regulated and applied selectively to a limited number of failing financial institutions, credit unions, etc, the announcement of a program of confiscation of deposits could potentially lead to a generalized “run on the banks”. In this context, no banking institution would be regarded as safe.
The application of Bail-in procedures involving deposit confiscation (even when applied locally or selectively) would create financial havoc. It would interrupt the payments process. Wages would no longer be paid. Purchasing power would collapse. Money for investment in plant and equipment would no longer be forthcoming. Small and medium sized businesses would be precipitated into bankruptcy.
The application of a Bail-In in the EU or North America would initiate a new phase of the global financial crisis, a deepening of the economic depression, a greater centralization of banking and finance, increased concentration of corporate power in the real economy to the detriment of regional and local level enterprises.
In turn, an entire global banking network characterized by electronic transactions (which govern deposits, withdrawals, etc), –not to mention money transactions on the stock and commodity markets– could potentially be the object of significant disruptions of a systemic nature.
The social consequences would be devastating. The real economy would plummet as a result of the collapse in the payments system.
The potential disruptions in the functioning of an integrated global monetary system could result in a a renewed global economic meltdown as well as a drop off in international commodity trade.
It is important that people across the land, in the European Union and North America, nationally and internationally, forcefully act against the diabolical ploys of their governments –acting on behalf of dominant financial interests– to implement a selective process of  bank deposit confiscation.

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Prime Minister Dmitry Medvedev built upon President Putin's earlier suggestion and formally proposed a grand multilateral economic partnership during his trip to China.

Russia has historically been known for thinking big, so what the Prime Minister proposed is totally in line with the country's political culture. While in the Chinese city of Zhengzhou to partake in the SCO Council of Heads of Government, Medvedev ambitiously stated that:

"Russia proposes starting consultations with the Eurasian Economic Union and Shanghai Cooperation Organization, including the counties joining the alliance, and with countries of the Association of Southeast Asian Nations on the creation of an economic partnership based on the principles of equality and mutual interests."

This suggestion corresponds to what President Putin said during his 3 December Address to the Federal Assembly, when he announced that:
"I propose holding consultations, in conjunction with our colleagues from the Eurasian Economic Union, with the SCO and ASEAN members, as well as with the states that are about to join the SCO, with the view of potentially forming an economic partnership."
In the blink of an eye, and at a time when the Western mainstream media is barking about Russia's purported lack of economic opportunities and "isolation", Moscow just proposed the world's most far-reaching economic partnership and took the West completely off guard.
From Minsk to Manila

© AP Photo/ Ng Han Guan, Pool

China Beating US in Trade Volume With ASEAN Nations

Russia's idea is very similar in concept to Charles de Gaulle's famous quip about a Europe "from Lisbon to Vladivostok". Taking into account current geopolitical realities and the fact that they're likely symptomatic of new long-term trends, Putin updated the former French leader's multipolar vision and essentially made it about a ‘Eurasia from Minsk to Manilla' instead. This reiteration represents the western-most and southeastern-most capitals of the proposed multilateral economic partnership and is an accurate way of describing the vast continental space contained within its borders. Let's review the membership of each organization that's envisioned to be party to what could eventually become a Grand Eurasian Free Trade Area (GEFTA): Eurasian Economic Union:
This nascent organization brings together the economies of Russia, Belarus, Armenia, Kazakhstan, and Kyrgyzstan and stretches over most of the former Soviet Union. While still in its infancy, its members are working hard to coordinate their common economic space and standardize related legal procedures within it. Unlike the EU to which it's often and misleadingly compared, there is no political component to the bloc and it is strictly an economic group that focuses on equitable shared interest.
SCO:
Originally known as the "Shanghai Five" and created in 1996 to assist with delineating the boundaries that five former Soviet states inherited with China, it gained its present name after the 2001 inclusion of Uzbekistan. The organization is now a multi-sectoral cooperative platform for its members and has grown past the shared former Soviet-Chinese space. India and Pakistan are currently ascending into the organization, while Afghanistan, Belarus, Iran, and Mongolia have observer status
ASEAN:
The oldest of the three organizations, it was created in 1967 in order to bring the Southeast Asian states closer together in all respects. The founding members were Indonesia, Malaysia, the Philippines, Singapore, and Thailand, but the group later incorporated Brunei in 1984, Vietnam in 1995, Laos and Myanmar in 1997, and finally Cambodia in 1999. Since its pan-regional expansion, the bloc has been one of the fastest-growing regions in the world, and its members just declared the ASEAN Economic Community (AEC) in late November in order to strengthen their integrational efforts.
Intersecting Interests
GEFTA is a very clever suggestion that seeks to benefit from the intersecting economic interests of its proposed partners. As it currently stands, here's what the macroeconomic arrangement looks like:
In Force:
India-ASEAN FTA
China-ASEAN FTA
China-Pakistan FTA
South Asian Association for Regional Cooperation (SAARC, a FTA stretching from Afghanistan to Bangladesh)
Proposed:
Eurasian Union-ASEAN FTA
Eurasian Union-China FTA
SCO FTA
Eurasian Union-India FTA
Eurasian Union-Iran FTA
India-Iran Free FTA
The Challenges Ahead
GEFTA is a long-term vision that will probably take some time to actualize, but in the meantime, there are two primary challenges standing in the way of its full proposed implementation. These are India's suspicion of China and the US-driven TPP:
India's Issues:
It's no secret that India and China are friendly competitors, but it might be more apt to describe them as geopolitical rivals at this point. While they publicly get along well in large-scale multilateral institutions such as the AIIB, BRICS, and the SCO, they fare a lot worse when it comes to indirect bilateral relations. They have lukewarm ties in dealing with each other one-on-one, but relations are considerably colder when they indirectly deal with the other via their policies with third-party states.

© AP Photo/ RIA Novosti Pool

SCO Develops Road Map for India, Pakistan Joining Organization

For example, India and China are in a heavy competition for influence over Nepal at this very moment, despite both sides publicly denying it, and it's aggravating the security dilemma between both of them. Also, Japanese Prime Minister Shinzo Abe just paid a landmark visit to India where it was announced that Japan will help build India's first high-speed rail project, share military secrets with it and sell related equipment, and help India in the field of nuclear energy. Suffice to say, India isn't behaving too friendly towards China, and when it comes to GEFTA, New Delhi might understandably be reluctant to partner with Beijing if it sees no tangible benefit in doing so. To reference the list in the second section, India has the potential to enter into free trade relations (or is already in them) with all of GEFTA's proposed members with the exception of China, Mongolia, and Uzbekistan, and it might not see Ulaanbaatar and Tashkent as suitable economic compensation for agreeing to the multilateral deal with China. From India's perspective, its leaders might instead choose to seal a raft of bilateral trade agreements instead of a massive multisided one that includes China.
TPP:
Fulfilling its role as the ultimate spoiler, the US is pushing the TPP partly because it knows that this could disrupt any independent free trade negotiations between ASEAN and its prospective Eurasian Union partners. While only a few of the group's members are officially party to this forthcoming agreement (Brunei, Malaysia, Singapore, and Vietnam), Indonesia's President Joko Widodo said in late October that his country intends to join, which if it happens, would decisively shift the bloc's economic gravity towards the US.

© AFP 2015/ MANAN VATSYAYANA

ASEAN Members Endorse 57 Joint Investment Projects Proposed by Russia

ASEAN has now begun an intensified process of self-integration through the AEC, and it's foreseeable that it will eventually seek to standardize its myriad FTAs. The problem arises when one considers that the TPP's ‘economic governance' precepts could seriously hinder the independent policies of some of its members and place them under the de-facto proxy control of the US and its transnational corporations. In the event that the TPP is finalized, the AEC states that are signatories to it would become institutionally loyal pro-American subjects that would have legally waived their right to a sovereign economic policy outside of Washington's purview. Considering the New Cold War geopolitical tensions between the unipolar and multipolar worlds, it's possible that the US might use its TPP influence within the AEC to find a way to revise ASEAN's existing FTA with China (and Vietnam's one with the Eurasian Union) on the grounds that they contradict one of the more than two million words absurdly contained in the TPP. The US' goal is to pry ASEAN away from all economic influences outside of the Pentagon's control (obviously including Russia and China) and entrap the burgeoning economies in an American-centric net of control.
The Verdict:
Even in the unfortunate scenario of India's non-participation in GEFTA and the US being successful in using the TPP to entice the AEC away from China and Russia, Moscow and Beijing could still shake the economic foundations of the Old World Order by deepening their bilateral trade relations, perhaps through a Eurasian Union-China FTA. India and ASEAN's multilateral cooperation in this framework would greatly assist in the economic development of a New Eurasia but they're not absolutely necessary, and Russia and China can still prevail in building an equitable Eurasian future on their own if need be.
The views expressed in this article are solely those of the author and do not necessarily reflect the official position of Sputnik.

Read more: http://sputniknews.com/columnists/20151215/1031764309/united-eurasia.html#ixzz3vsG6xQrw

IMF Chief Pours Cold Water On Optimistic Yellen, Says Growth "Will Be Disappointing"

Over the past six or so months, the OECD, the WTO, and the ADB have all come out with rather grim assessments of global growth and trade.
Back in September for instance, the WTO warned that the rate of growth in global trade is set to trail the expansion of the worldwide economy for the third year running. As WSJ noted at the time, “before the recent slump, the last time trade growth underperformed the rate of an economic expansion was 1985.”
“We have seen this burst of globalization, and now we’re at a point of consolidation, maybe retrenchment,” WTO chief economist Robert Koopman said. “It’s almost like the timing belt on the global growth engine is a bit off or the cylinders are not firing as they should.”
“Global growth prospects have weakened slightly and the outlook is clouded by important uncertainties,” the OECD said later in September. “Emerging economies have vulnerabilities that could be exposed by rising US interest rates and/or a sharper-than-expected slowdown in China, giving rise to financial and economic turbulence that could also exert a significant drag on advanced economies,” the organization continued.

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Finally, the ADB weighed in, noting that “softer growth prospects for the People’s Republic of China (PRC) and India, and a slow recovery in the major industrial economies, will combine to push growth in developing Asia for 2015 and 2016 below previous projections.”
Those assessments came just as the Fed adopted the “clean relent” in September and make no mistake, the outlook hasn’t changed since then. Just ask IMF chief Christine Lagarde.
In a guest article for Handelsblatt, Lagarde lays bare the risks facing global trade on the way to painting a rather depressing picture for 2016.
“Global economic growth will be disappointing next year and the outlook for the medium-term has also deteriorated,” Reuters says, recounting Lagarde’s comments. “The prospect of rising interest rates in the United States and an economic slowdown in China [are] contributing to uncertainty and a higher risk of economic vulnerability worldwide.”
Lagarde warns of the “spillover effects” from the Fed hike, including the possibility that fragile emerging markets may be shaken further at a time when myriad risk factors are already weighing on the space.
China’s transition from a smokestack, investment-led economy to a consumption and services led model as well as Fed policy normalization are “necessary” but should be executed carefully with a mind towards mitigating shocks, she continues.
Specifically, Lagarde is concerned about the nightmare scenario that occurs when EM corporates borrow heavily in dollars only to see their currencies depreciate rapidly, the so called "original sin" that's been largely avoided at the sovereign level, but not by corporates. For an example of what can happen in such instances, see Empresas ICA SAB.
As a reminder, EMEs have over $3 trillion in USD-denominated debt:

"Most highly developed economies except the USA and possibly Britain will continue to need loose monetary policy but all countries in this category should comprehensively factor spillover effects into their decision-making," she goes on to say, underscoring the fact that there are risks both to hiking and to remaining suspended in the Keynesian Twilight Zone.
Ultimately, the takeaway is the the head of the IMF, who supposedly knows about such things, has just delivered a decisively negative outlook for global growth and trade in 2016 and that assessment seems to be at odds with the FOMC. That is, Lagarde is warning on economic growth and the dangerous "spillover effects" of a Fed rate hike cycle just as Janet Yellen is using stronger economic growth as an excuse and a justification for liftoff.
Of course such "truthiness" is tantamount to heresy in today's world, so perhaps this is why Lagarde's criminal case was reopened.

Will The New Swiss Referendum Reign in the Banking Beast, or Create a New Monster?

by The Wealth Watchman

Another Shake-Up Attempt
As we head into 2016, the global financial system continues to teeter all around us. Years of virtually zero-percent interest rates in the US, along with stagnant rates the world over(accompanied by chronic unemployment), have made many do a complete rethink of what money and currency is, what it should be, and how it should be created.
These questions must be considered by any populace longing to be free, and who wish to determine their own destiny. For too long, the oligarchs in our world have called the shots, and determined those things for us, without ever asking us if that’s what we wanted. That’s why when I recently read this headline about how a European country is attempting some very serious banking & monetary reforms, I was very encouraged.

“Switzerland to vote on banning banks from creating money“

If you think that this headline sounds like a big deal, it would be in some ways. Here’s what it would do.
Swiss Sovereign Money Initiative
The proposal that the Swiss people will be voting on(at a time yet to be determined) would seek to wrest the disastrous control that commercial banks have over creating currency, and put 100% of it in the hands of the Swiss National Bank.
The Swiss Sovereign Money Initiative’s(SSMI) reasoning for this referendum can be found at the link here, and I do encourage shield brothers to go and read it.  The SSMI’s main goals would be to:
1) End fractional reserve banking, by requiring all the private banks to keep 100% of deposits in reserve.
2) Give the Swiss National Bank total control over the creation/issuance of debt-free currency instead.
As many shield brothers know, in the modern, fractional-reserve banking system, the private banks largely control the issuance of new currency. These banks create new credit/currency out of thin air as they draw upon the customer loans in their vaults, to back new bank loans with.  They’re able to do this because they’re only required to keep a small percentage of customer deposits in their vaults, to satisfy depositor demands.  Sometimes banks carry as little as 10% of their cash deposits on hand(or even less) to backstop all their loans. In other words, this means they often loan(and thus, create) 10 times as much capital as they have in the vaults…from nothing!
It’s an utter scam, that creates a parasitical merchant class, which drains the rest of society, by causing booms and busts.  It also means the banking sector ends up being the receiver of very lopsided subsidies from the government, in order to keep it paid and propped up.
Subsidizing private banks, at the expense of a nation’s people, is one of the most wicked social ills in our world today.  It is this subsidy, this monopoly, which causes the speculative lending, the market rigging, the wars, the economic booms and crashes….and most importantly…has led to the rampant globalism(and erosion of freedom and sovereignty) we now see.
This problem has led to an extremely powerful banking class in Switzerland, where, according to the SSMI, roughly 90% of Swiss currency(which is digital), is created by those commercial Swiss banks.
90%!  This gives ridiculous power to the UBS’s, and the Credit Suisses across their landscape, to dominate everything.
This SSMI voter initiative would strip much of that power away from those private banks, by requiring them to maintain 100% deposit reserve ratios.  In other words, commercial banks could not create “deposits/credit” from thin air, but would be restricted to the deposits they have on hand from savers, or from other banks.  
Forcing banks back to a 1 to 1 ratio would certainly take the bite out of predatory lending practices, it would do much to reign in the boom/bust cycles in their economy, and it would reduce the banking class back to a manageable power and influence within their society.  Those would be huge positives.
I like the ideas of eliminating fractional reserve banking.  At the very least, commercial banks should be able to discover what the market’s tolerance of reserve ratios would be without central banks to backstop them(as Scotland’s banking system once did). However, in order to prevent a new banking cartel from emerging, a 100% reserve ratio would likely work best.
However, though there’s alot to like about this voter initiative,there’s just one big problem with the entire proposal, and you may have guessed what it is…
Out of the Frying Pan, Into the Fire
The Swiss National Bank, whom the Swiss people are now trying to give 100% control over their nation’s currency issuance to…is also a private bank!
If you remember nothing else I ever tell you, please remember that one of the greatest illusions/lies in our world today, is that:
Central banks are non-profit organizations with deep hearts, who only care about charity and the ‘greater good’ of their constituencies.
Believe me, nothing could be further from the truth!
For instance, the Federal Reserve in the United States is as “Federal” as the Federal Express(FedEx)! It is a private, for profit bank, which loans currency into existence to the US Government(who borrows it, with interest attached). This means the Federal Reserve ends up owning the government, owning the economy, owning the labor of the citizens(as collateral to repay the loans), and owning the entire political system itself.
For crying out loud…the Federal Reserve has shareholders(as does the SNB)! Most of those shareholders are….you guessed it….the largest private, commercial banks in the world!
  The Federal Reserve exists to backstop and rubberstamp whatever loathsome, criminal activities its primary banks are engaged in, and those commercial banks(in return) exist to help steer economic & monetary policy, as well as rig markets, in order to keep the monopoly power of issuing US dollars(as a public debt) firmly in the Federal Reserve’s control.
It’s a symbiotic relationship of utter toxicity, only made possible through government-enforced monopoly, war, and a massive crime spree.
The exact same is true of the Swiss National Bank(SNB)! The SNB only came into a limited existence around 1907, but(just like the Fed) didn’t receive its first mandate to create small-denominated currency notes in a serious way until roughly 1914.
Why 1914?
Because World War I was being fought, and wars of that size cannot be fought without massive debts! No government had the capital to pay for such wars up front, with cash on the barrel-head.
Thusly, the banking class stepped in to accommodate rival governments in their bid to blow up as much as possible for as long as possible.
The “Great War” was made possible by “public banks” like the Fed(created in 1913) and the SNB. Ron Paul once correctly noted:
“It is no coincidence that the century of total war coincided with the century of central banking”.
Truer words are seldom spoken. Think about it:
These central banks made the carnage possible. 
They amplified the scale in which wars could be fought.
They indebted the besieged peoples of those wars to the very same powers that enabled those wars in the first place.
If the problem of monetary issuance is a lack of ‘moral authority’, believe me, central banks have the least moral authority on earth! They’re all neck-deep in criminality and only serve the most demonic individuals in our world.
Don’t get me wrong. I want to say up front, that there’s alot to like about the SSMI plan:
I do think banks should be reigned in.
I do think that they should be literally tied to the earth, with realistic monetary restrictions, based in reality.
I do think commercial banks should be stripped of money-creating powers.
All those problems are addressed in this proposal. That’s good!
What’s not good is that the well-meaning folks at SSMI are about to strip one financial demon of currency creation powers, and hand it to another demon which is just as bad!  Of all the institutions that might be given this power, the Swiss National Bank is one of the worst you could pick!
For those who don’t believe me, lemme refresh your memory as to the recent criminal shenanigans the SNB was involved with!
Who Calls the Monetary Shots

That picture above was advertising for the recent Swiss gold initiative that the Swiss people voted on in 2014.  It was called “Save Our Swiss Gold”(SOSG).  It was meant to address the people’s concerns over the Swiss National Bank selling Swiss gold onto the open market for years.
Until the year 2000, the Swiss Franc was partially backed by gold, roughly 20% or so, at least on paper.  That all began to change afterward though, as the Swiss National Bank began unloading quantities of gold which it considered to be “superfluous”, reducing the gold reserves behind the Swiss Franc from 20% down to 7%!
The initiative would’ve forced the gold sales by the SNB(which were only conducted to help the banking cabal suppress the price of gold) to stop, and would’ve reversed the process.  It would’ve forced the SNB to go onto the open market to buy up sufficient gold tonnage to replace the lost tonnage needed, in order to raise the gold reserve ratio back to 20%.  It would’ve also repatriated any Swiss gold held abroad by other central banks.
What’s not to like, right?  Who wouldn’t want that?
The Swiss National Bank, that’s who!  
The Swiss National Bank literally went nuclear on the proposal. They bought up TV advertising against the initiative, they trotted out all the bankers, all the writers, all the pundits, who all condemned SOSG…saying it would literally mean the end of “adaptive” monetary policy in Switzerland if the people voted yes.
The propaganda blitz worked, as the Swiss people were scared into rejecting it, with roughly 78% voting no.
In other words, the greatest opponent of returning Swiss gold to the Swiss people, and of returning Swiss monetary sovereignty to Switzerland…was the Swiss National Bank! The SNB was directly using its money-power, and its influence to overturn or sway the will of the Swiss electorate!
That in itself is highly problematic, but WHY the SNB did it is absolutely beyond the pale…
It’s now been reported that the reason why the SNB staunchly stood against the referendum, is that the SNB had a huge short position against gold in the futures market! They established that short position the moment they announced that the Swiss Franc would be “capped” or fixed to the Euro! Controlling gold was necessary if the “safe haven” Swiss Franc was going to be fixed to the much larger Euro currency pool.
The SNB knew that if they had to go out and directly buy thousands of tonnes of gold on the open market, and repatriate other gold held by other central banks(to help rig the gold price lower), its short position(it was using to RIG a world commodity market) would’ve shortly gone underwater!
It would’ve blown up their short gold position.
It would’ve severely, and instantly damaged their balance sheet.
It would’ve jeapordized the international banking scheme to rig gold(and silver), thusly jeapordizing the global debt-based ponzi lending scheme(that the SNB fully supports and participates in).
And these are the folks the Swiss people are seeking to entrust with 100%, monopoly powers, to create and control Swiss currency?
I don’t think so.
Conclusion
The problematic scenario for the SSMI voter referendum(in a nutshell) is that it’s trying to solve the problem of “a morally/fiscally bankrupt class of private bankers having total control over currency creation” by handing that power to another morally/fiscally bankrupt, private, criminal banking institution.
Here’s what I suggest the Swiss do.  If they insist on giving any institution the sole power to create currency:
1) Utterly abolish the SNB. It is a tainted institution, which has no moral authority to lead, even if it were totally reorganized.
2) Create a new institution for the task, which would truly be a government entity, having the power to create debt-free currency.
3) Ensure all commercial banks have ZERO shareholder ownership of that institution, and instead make EVERY Swiss citizen each an equal shareholder!(Radical, I know, right?)
4) Ensure that any and all surpluses in profit were either, a)kept in a fund for the purpose of loaning to Swiss citizens in times of need, or b) paid to Swiss citizens in a regular cash distribution.
Now THAT would be a truly revolutionary solution, akin to something like the “Bank of North Dakota” solution! While still flawed, it would be unbelievable improvement to what they’re pursuing, and what exists in Switzerland now.
  It’s good for a nation to debate who should create currency.  It’s good that they have the power to vote and decide such things.  It’s good to ensure that any future currency is created debt-free.
But, in the name of God, do not give the unbelievable power of sole currency-creation to privately-controlled central banks:
No one on earth has more blood on their hands than these people…

The Federal Reserve goes against everything that our founders believed to be running up so much government debt and we need to educate the American people about the Fed while there is still time.

By Michael Snyder

What would happen if the Federal Reserve was shut down permanently?  That is a question that CNBC asked recently, but unfortunately most Americans don’t really think about the Fed much. Most Americans are content with believing that the Federal Reserve is just another stuffy government agency that sets our interest rates and that is watching out for the best interests of the American people.  But that is not the case at all.  The truth is that the Federal Reserve is a private banking cartel that has been designed to systematically destroy the value of our currency, drain the wealth of the American public and enslave the federal government to perpetually expanding debt.  During this election year, the economy is the number one issue that voters are concerned about.  But instead of endlessly blaming both political parties, the truth is that most of the blame should be placed at the feet of the Federal Reserve.  The Federal Reserve has more power over the performance of the U.S. economy than anyone else does.  The Federal Reserve controls the money supply, the Federal Reserve sets the interest rates and the Federal Reserve hands out bailouts to the big banks that absolutely dwarf anything that Congress ever did.  If the American people are ever going to learn what is really going on with our economy, then it is absolutely imperative that they get educated about the Federal Reserve.

The following are 10 things that every American should know about the Federal Reserve….
#1 The Federal Reserve System Is A Privately Owned Banking Cartel
The Federal Reserve is not a government agency.
The truth is that it is a privately owned central bank.  It is owned by the banks that are members of the Federal Reserve system.  We do not know how much of the system each bank owns, because that has never been disclosed to the American people.
The Federal Reserve openly admits that it is privately owned.  When it was defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve stated unequivocally in court that it was “not an agency” of the federal government and therefore not subject to the Freedom of Information Act.
In fact, if you want to find out that the Federal Reserve system is owned by the member banks, all you have to do is go to the Federal Reserve website….

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations–possibly leading to some confusion about “ownership.” For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

Foreign governments and foreign banks do own significant ownership interests in the member banks that own the Federal Reserve system.  So it would be accurate to say that the Federal Reserve is partially foreign-owned.
But until the exact ownership shares of the Federal Reserve are revealed, we will never know to what extent the Fed is foreign-owned.
#2 The Federal Reserve System Is A Perpetual Debt Machine
As long as the Federal Reserve System exists, U.S. government debt will continue to go up and up and up.
This runs contrary to the conventional wisdom that Democrats and Republicans would have us believe, but unfortunately it is true.
The way our system works, whenever more money is created more debt is created as well.
For example, whenever the U.S. government wants to spend more money than it takes in (which happens constantly), it has to go ask the Federal Reserve for it.  The federal government gives U.S. Treasury bonds to the Federal Reserve, and the Federal Reserve gives the U.S. government “Federal Reserve Notes” in return.  Usually this is just done electronically.
So where does the Federal Reserve get the Federal Reserve Notes?
It just creates them out of thin air.
Wouldn’t you like to be able to create money out of thin air?
Instead of issuing money directly, the U.S. government lets the Federal Reserve create it out of thin air and then the U.S. government borrows it.
Talk about stupid.
When this new debt is created, the amount of interest that the U.S. government will eventually pay on that debt is not also created.
So where will that money come from?
Well, eventually the U.S. government will have to go back to the Federal Reserve to get even more money to finance the ever expanding debt that it has gotten itself trapped into.
It is a debt spiral that is designed to go on perpetually.
You see, the reality is that the money supply is designed to constantly expand under the Federal Reserve system.  That is why we have all become accustomed to thinking of inflation as “normal”.
So what does the Federal Reserve do with the U.S. Treasury bonds that it gets from the U.S. government?
Well, it sells them off to others.  There are lots of people out there that have made a ton of money by holding U.S. government debt.
In fiscal 2011, the U.S. government paid out 454 billion dollars just in interest on the national debt.
That is 454 billion dollars that was taken out of our pockets and put into the pockets of wealthy individuals and foreign governments around the globe.
The truth is that our current debt-based monetary system was designed by greedy bankers that wanted to make enormous profits by using the Federal Reserve as a tool to create money out of thin air and lend it to the U.S. government at interest.
And that plan is working quite well.
Most Americans today don’t understand how any of this works, but many prominent Americans in the past did understand it.
For example, Thomas Edison was once quoted in the New York Times as saying the following….

That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt.
Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 — that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we simply add 120 to 150 per cent, to the stated cost.
But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good.

We should have listened to men like Edison and Ford.
But we didn’t.
And so we pay the price.
On July 1, 1914 (a few months after the Fed was created) the U.S. national debt was 2.9 billion dollars.
Today, it is more than more than 5000 times larger.
Yes, the perpetual debt machine is working quite well, and most Americans do not even realize what is happening.
#3 The Federal Reserve Has Destroyed More Than 96% Of The Value Of The U.S. Dollar
Did you know that the U.S. dollar has lost 96.2 percent of its value since 1900?  Of course almost all of that decline has happened since the Federal Reserve was created in 1913.
Because the money supply is designed to expand constantly, it is guaranteed that all of our dollars will constantly lose value.
Inflation is a “hidden tax” that continually robs us all of our wealth.  The Federal Reserve always says that it is “committed” to controlling inflation, but that never seems to work out so well.
And current Federal Reserve Chairman Ben Bernanke says that it is actually a good thing to have a little bit of inflation.  He plans to try to keep the inflation rate at about 2 percent in the coming years.
So what is so bad about 2 percent?  That doesn’t sound so bad, does it?
Well, just consider the following excerpt from a recent Forbes article….

The Federal Reserve Open Market Committee (FOMC) has made it official:  After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years.  The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.

#4 The Federal Reserve Can Bail Out Whoever It Wants To With No Accountability
The American people got so upset about the bailouts that Congress gave to the Wall Street banks and to the big automakers, but did you know that the biggest bailouts of all were given out by the Federal Reserve?
Thanks to a very limited audit of the Federal Reserve that Congress approved a while back, we learned that the Fed made trillions of dollars in secret bailout loans to the big Wall Street banks during the last financial crisis.  They even secretly loaned out hundreds of billions of dollars to foreign banks.
According to the results of the limited Fed audit mentioned above, a total of $16.1 trillion in secret loans were made by the Federal Reserve between December 1, 2007 and July 21, 2010.
The following is a list of loan recipients that was taken directly from page 131 of the audit report….
Citigroup – $2.513 trillion
Morgan Stanley – $2.041 trillion
Merrill Lynch – $1.949 trillion
Bank of America – $1.344 trillion
Barclays PLC – $868 billion
Bear Sterns – $853 billion
Goldman Sachs – $814 billion
Royal Bank of Scotland – $541 billion
JP Morgan Chase – $391 billion
Deutsche Bank – $354 billion
UBS – $287 billion
Credit Suisse – $262 billion
Lehman Brothers – $183 billion
Bank of Scotland – $181 billion
BNP Paribas – $175 billion
Wells Fargo – $159 billion
Dexia – $159 billion
Wachovia – $142 billion
Dresdner Bank – $135 billion
Societe Generale – $124 billion
“All Other Borrowers” – $2.639 trillion
So why haven’t we heard more about this?
This is scandalous.
In addition, it turns out that the Fed paid enormous sums of money to the big Wall Street banks to help “administer” these nearly interest-free loans….

Not only did the Federal Reserve give 16.1 trillion dollars in nearly interest-free loans to the “too big to fail” banks, the Fed also paid them over 600 million dollars to help run the emergency lending program.  According to the GAO, the Federal Reserve shelled out an astounding $659.4 million in “fees” to the very financial institutions which caused the financial crisis in the first place.

Does reading that make you angry?
It should.
#5 The Federal Reserve Is Paying Banks Not To Lend Money
Did you know that the Federal Reserve is actually paying banks not to make loans?
It is true.
Section 128 of the Emergency Economic Stabilization Act of 2008 allows the Federal Reserve to pay interest on “excess reserves” that U.S. banks park at the Fed.
So the banks can just send their cash to the Fed and watch the money come rolling in risk-free.
So are many banks taking advantage of this?
You tell me.  Just check out the chart below.  The amount of “excess reserves” parked at the Fed has gone from nearly nothing to about 1.5 trillion dollars since 2008….

But shouldn’t the banks be lending the money to us so that we can start businesses and buy homes?
You would think that is how it is supposed to work.
Unfortunately, the Federal Reserve is not working for us.
The Federal Reserve is working for the big banks.
Sadly, most Americans have no idea what is going on.
Another example of this is the government debt carry trade.
Here is how it works.  The Federal Reserve lends gigantic piles of nearly interest-free cash to the big Wall Street banks, and in turn those banks use the money to buy up huge amounts of government debt.  Since the return on government debt is higher, the banks are able to make large profits very easily and with very little risk.
This scam was also explained in a recent article in the Guardian….

Consider this: we pretend that banks are private businesses that should be allowed to run their own affairs. But they are the biggest scroungers of public money of our time. Banks are lent vast sums of money by central banks at near-zero interest. They lend that money to us or back to the government at higher rates and rake in the difference by the billion. They don’t even have to make clever investments to make huge profits.

That is a pretty good little scam they have got going, wouldn’t you say?
#6 The Federal Reserve Creates Artificial Economic Bubbles That Are Extremely Damaging
By allowing a centralized authority such as the Federal Reserve to dictate interest rates, it creates an environment where financial bubbles can be created very easily.
Over the past several decades, we have seen bubble after bubble.  Most of these have been the result of the Federal Reserve keeping interest rates artificially low.  If the free market had been setting interest rates all this time, things would have never gotten so far out of hand.
For example, the housing crash would have never been so horrific if the Federal Reserve had not created such ideal conditions for a housing bubble in the first place.  But we allow the Fed to continue to make the same mistakes.
Right now, the Federal Reserve continues to set interest rates much, much lower than they should be.  This is causing a tremendous misallocation of economic resources, and there will be massive consequences for that down the line.
#7 The Federal Reserve System Is Dominated By The Big Wall Street Banks
Even since it was created, the Federal Reserve system has been dominated by the big Wall Street banks.
The following is from a previous article that I did about the Fed….

The New York representative is the only permanent member of the Federal Open Market Committee, while other regional banks rotate in 2 and 3 year intervals.  The former head of the New York Fed, Timothy Geithner, is now U.S. Treasury Secretary.  The truth is that the Federal Reserve Bank of New York has always been the most important of the regional Fed banks by far, and in turn the Federal Reserve Bank of New York has always been dominated by Wall Street and the major New York banks.

#8 It Is Not An Accident That We Saw The Personal Income Tax And The Federal Reserve System Both Come Into Existence In 1913
On February 3rd, 1913 the 16th Amendment to the U.S. Constitution was ratified.  Later that year, the United States Revenue Act of 1913 imposed a personal income tax on the American people and we have had one ever since.
Without a personal income tax, it is hard to have a central bank.  It takes a lot of money to finance all of the government debt that a central banking system creates.
It is no accident that the 16th Amendment was ratified in 1913 and the Federal Reserve system was also created in 1913.
They have a symbiotic relationship and they are designed to work together.
We could fill Congress with people that are committed to ending this oppressive system, but so far we have chosen not to do that.
So our children and our grandchildren will face a lifetime of debt slavery because of us.
I am sure they will be thankful for that.
#9 The Current Federal Reserve Chairman, Ben Bernanke, Has A Nightmarish Track Record Of Incompetence
The mainstream media portrays Federal Reserve Chairman Ben Bernanke as a brilliant economist, but is that really the case?
Let’s go to the videotape.
The following is an extended excerpt from an article that I published previously….
———-
In 2005, Bernanke said that we shouldn’t worry because housing prices had never declined on a nationwide basis before and he said that he believed that the U.S. would continue to experience close to “full employment”….

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”

In 2005, Bernanke also said that he believed that derivatives were perfectly safe and posed no danger to financial markets….

“With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”

In 2006, Bernanke said that housing prices would probably keep rising….

“Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”

In 2007, Bernanke insisted that there was not a problem with subprime mortgages….

“At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”

In 2008, Bernanke said that a recession was not coming….

“The Federal Reserve is not currently forecasting a recession.”

A few months before Fannie Mae and Freddie Mac collapsed, Bernanke insisted that they were totally secure….

“The GSEs are adequately capitalized. They are in no danger of failing.”

For many more examples that demonstrate the absolutely nightmarish track record of Federal Reserve Chairman Ben Bernanke, please see the following articles….
*”Say What? 30 Ben Bernanke Quotes That Are So Stupid That You Won’t Know Whether To Laugh Or Cry”
*”Is Ben Bernanke A Liar, A Lunatic Or Is He Just Completely And Totally Incompetent?”
But after being wrong over and over and over, Barack Obama still nominated Ben Bernanke for another term as Chairman of the Fed.
———-
#10 The Federal Reserve Has Become Way Too Powerful
The Federal Reserve is the most undemocratic institution in America.
The Federal Reserve has become so powerful that it is now known as “the fourth branch of government”, but there are less checks and balances on the Fed than there are on the other three branches.
The Federal Reserve runs the U.S. economy but it is not accountable to the American people.  We can’t vote those that run the Fed out of office if we do not like what they do.
Yes, the president appoints those that run the Fed, but he also knows that if he does not tread lightly he won’t get the money from the big Wall Street banks that he needs for his next election.
Thankfully, there are a few members of Congress that are complaining about how much power the Fed has.  For example, Ron Paul once told MSNBC that he believes that the Federal Reserve is now actually more powerful than Congress…..

“The regulations should be on the Federal Reserve. We should have transparency of the Federal Reserve. They can create trillions of dollars to bail out their friends, and we don’t even have any transparency of this. They’re more powerful than the Congress.”

As members of Congress such as Ron Paul have started to shed some light on the activities of the Federal Reserve, that has caused many in the mainstream media to come to the defense of the Fed.
For example, a recent CNBC article entitled “If The Federal Reserve Is Abolished, What Then?” makes it sound like there is absolutely no other rational alternative to having the Federal Reserve run our economy.
But this is not what our founders intended.
The founders did not intend for a private banking cartel to issue our money and set our interest rates for us.
According to Article I, Section 8 of the U.S. Constitution, the U.S. Congress has been given the responsibility to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.
So why is the Federal Reserve doing it?
But the CNBC article mentioned above makes it sound like the sky would fall if control of the currency was handed back over to the American people.
At one point, the article asks the following question….

“How would the U.S. economy then function? Something has to take its place, right?”

No, the truth is that we don’t need anyone to “manage” our economy.
The U.S. Treasury could be in charge of issuing our currency and the free market could set our interest rates.
We don’t need to have a centrally-planned economy.
We aren’t China.
And it goes against everything that our founders believed to be running up so much government debt.
For example, Thomas Jefferson once declared that if he could add just one more amendment to the U.S. Constitution it would be a ban on all government borrowing….

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.

Oh, how things would have been different if we had only listened to Thomas Jefferson.
Please share this article with as many people as you can.  These are things that every American should know about the Federal Reserve, and we need to educate the American people about the Fed while there is still time.

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Ian56 @Ian56789

The Federal Reserve is part of, or controlled by, the US gov & works for you http://themindunleashed.org/2014/01/10-things-everyone-know-federal-reserve.html … #LiesToldToUs

Top 10 Reasons Why Ginni Rometty Will Fail as IBM’s New CEO

Author: Steven Zolman
IBM’s first female CEO, Virginia “Ginni” Rometty, is in after Sam Palmisano parachutes out with $127 million, but not until he leaves a wake of wreckage in his trail.  Ginni will have big challenges to overcome if she is to be successful leading IBM, and in this blog, I will outline the Top 10 Reasons Why Ginni Rometty Will Fail as IBM’s new CEO.

1. IBM Forgot Who They Were.  The “M” in IBM is for Machines.  Machines for International Businesses; that is who IBM was.  Who is IBM today?  Somewhere along the way, IBM figured out that it was much cheaper to sell services than it was to produce goods, and so they focused their efforts on these “high margin” services instead of equipment that was capitally intensive, was quickly commoditized, and was not able to sustain such a strong business model.  What has happened since is that the services business is now impaired, not able to generate the kinds of profits IBM wants, and is now the source of huge cost cutting measures to try to save it (or prepare it for sale).  Ironic to be sure, but IBM used to build things, they used to build things of high quality, and they used to service those things extremely well.  Now, they are increasingly focusing their business around sales guys who sell services, and services people who are increasingly low skilled because they are cheaper than highly skilled resources.  Hmmm, something may be wrong with this strategy.  If Ginni’s not able to create a new understanding of who IBM is, she will fail as its new CEO.

2. Ginni Has No Vision for the Future of IBM.  Or if she does, she hasn’t told anyone yet.  Since becoming CEO, Ginni only promises more of the same from IBM — continuing to pursue more “high margin” areas in the business — YAWN!  IBM needs a new vision for the future, not the same old boring rhetoric.  What will *her* vision be for IBM, and how will she make that a reality?  When Gerstner devised this high margin pursuit strategy, it was a tactic to save a dying company, not a complete vision for the future.  IBM hasn’t been able to move beyond this temporary fix to the next evolution of what it will become in the future.  If Ginni’s not able to clearly articulate her vision for the future of IBM, and if it’s not substantively different from what it is today, people won’t believe in it and won’t rally around her, and she will not be able to save IBM, and will fail as its new CEO.

3. IBM Executives are out of Touch.  IBM has gone through major transformations before, and the last major transformation was designed to make the company more lean, more efficient, and able to make better decisions.  One of the stated objectives of that reorganization was to reduce bloat, simplify management, and connect the company to the decision makers so they would make better business decisions faster and more effectively.  Today, IBM has more layers of management than it did before these efforts, and that executive bloat has not only cost the organization more money, it has further insulated top decision makers from developing a real understanding of the business, and therefore their decisions are not as good as they can be.  What’s worse; there is no real accountability for these bad decisions because they don’t see the real field impact, and are not able to decipher what’s working and what isn’t, rendering them as useless politicians that merely manage their careers.  Her closest advisors will be giving her junk advice.  If she can’t figure that out and slash through it, she’s done.  Also, if Ginni can’t slash management layers, improve decision making, and create more accountability with (far fewer of) these career IBM politicians, she will fail as IBM’s new CEO.

4. IBM’s Sales Culture is Poison.  IBM’s sales culture has nearly ruined the company as many of its executives have no real knowledge about the products and services they sell, rather an obsessive desire for more “high margin” sales.  IBM’s sales aspirations, and its plan to achieve those objectives, will ruin the company if not revised.  IBM has developed growth objectives for earnings, and all indicators of the plan to achieve these aggressive targets seem to come at the expense of jobs, primarily jobs based in the USA – in favor of shipping them overseas, as this is thought to be ‘less costly’.  The scale of a reduction required to achieve the aggressive growth targets for earnings suggest that while executives and sales folks will stay, most everyone else will need to go.  The staff changes will require massive cuts in technical folks.  The very same technical wizards who invent the products, get the patents, establish a new and innovative technology that can create a dominant market position are the ones that will need to go to achieve the targets.  IBM’s sales culture and its current strategic plan will kill IBM if Ginni can’t stop it, and so far, she is only promising more of the same.

5. IBM’s Executive Compensation is Misaligned.  IBM has aligned executive compensation to its earnings per share targets, and if the executives achieve their targets, again, primarily by downgrading skilled workers in the USA, and moving labor from the USA to lower cost countries, which will be a move that kills the ability of the company to innovate and solve complex problems, they get stock incentives.  This executive compensation misalignment continues to drive behaviors towards activities that are killing the organization, yet the strategic plan hasn’t changed, nor has the executive compensation arrangement changed since Ginni’s arrival.  If this continues under the current model, the executives will make out, IBM customers will suffer, a great number of IBM employees will lose their jobs, and a great American institution will go down in flames.  Ginni needs to change where she places the cheese if she wants to change the behaviors of her executives, but again, that starts with a new strategic vision, and that has not yet been espoused in a clear, articulate and compelling way; in fact, quite the opposite.  If Ginni can’t reset IBM’s executive compensation plans to better align them to the right behaviors to foster growth, innovation, quality and excellent service, she will fail as IBM’s new CEO.

6. IBM’s Rape, Pillage & Burn Acquisition Strategy.  This is an area where IBM deserves some credit.  At least they get the sequencing right.  If they were to burn first, they wouldn’t be able to rape & pillage, so at the very least, let’s give them credit for knowing how to ruin a company properly.  One of the ways IBM has cloaked its demise is to continue to buy highly profitable businesses with the hoards of cash the company controls.  Once they do buy a new company, however, as a matter of routine, they saddle those organizations with bloated IBM processes, force them through standards processes that strip out much that was special, unique and cool about the acquired entity, they increase charges back to the mother ship to siphon off profits, and ultimately, they make the company no longer able to satisfy its customers, who eventually leave.  Once IBM has sucked out all the blood, they leave the body for dead and go find another new company to buy (and subsequently ruin).  If Ginni would change this model to be one of finding innovative companies that offer excellent services and provide high quality products, and helping those companies grow and develop, IBM could turn it around, but all internal signs indicate a continued focus on lowering skills, slashing R&D, eliminating innovation, and selling more promises with fewer deliveries of those promises.  If this acquisition strategy persists, Ginni will fail as IBM’s new CEO.

7. IBM’s Offshore Model will kill its Services Business.  I hear a lot of people say that IBM is a services company.  Well if that’s the case, they are actively trying to commit suicide by killing off their services business.  Over the last five years, IBM has aggressively pursued an offshore staffing model, seemingly believing that more unskilled workers are a more effective way to do business than having fewer higher skilled workers.  Apparently, IBM doesn’t understand that you can’t outsource making a baby in a month to nine women in India.  Not only does this create problems with logistics, language, communications and other issues, it eliminates the organization’s ability to solve complex problems.  Many of our clients who subscribe to this model are dramatically disappointed with IBM’s lack of effectiveness on resolving issues, and amazed at how long it takes, and how many people it requires to get resolution.  The aggressive offshore model particularly affects IBM Global Services, which represents a disproportionate share of revenue and employee head count, so the impact here will be severe.  In the last 18 months, NET(net) has noticed a sharp increase in the number of disenfranchised clients who have terminated their agreements with IBM and sought arrangements with other suppliers.  If Ginni allows the IBM Offshore model to continue in Global Services, the company will further convolute its ability to execute, become less able to solve complex problems, and will continue to lose more business at a faster rate.

8. IBM Sells Futures.  What is IBM’s strategy?  Smarter Planet?  No, my laundry machine doesn’t do the wash when it knows I have plenty of excess hot water.  No, my irrigation system doesn’t water the lawn when water prices are the lowest.  No, my refrigerator doesn’t order groceries for me from the store when I’m running low.  No, my car doesn’t sense when I am driving angry and schedule me in for a massage.  IBM needs to stop selling futures, and just make stuff that works, service it well, and help its customers get value from it.  IBM seems less capable more so today than perhaps at any time in recent history to solve complex problems, and it’s too busy worrying about airing commercials that look like a United Nations conference than it is about building stuff that works.  It seems like IBM has been selling futures for as long as everyone can remember, and for decades, they have gotten away with it.  It seems more and more however, customers are less willing to buy the hype, and are more concerned about buying stuff that works.

9. Watson is not the Panacea.  One thing is clear, as IBM has studied various business models, it has determined that vertically integrated systems like those found in Big Data, (where the hardware and the software of these systems are sold together as a bundle) are highly profitable, and do not require a lot of people to service them.  This idea is seen predominantly in Watson, IBM’s enterprise version of Apple’s Siri, a hugely expensive and likely a highly profitable, amalgamation of hardware and software, bundled together in a highly valuable enterprise application.  Could this be where IBM is heading?  They want to make huge enterprise class iPhones with Watson instead of Siri?  Who knows.  What is clear is that many of IBMs investments have been around enterprise infrastructure, enterprise applications, analytics and Big Data, many of the key ingredients for Watson-like functionality.  This is a general industry trend as organizations like HP, EMC, Oracle and others are on a similar path of selling vertically integrated systems with hardware and software bundled into a supposedly “highly tuned” bundle that offers greater overall value.  In our experiences, buying the integrated system certainly costs a lot more than buying its individual parts, but our clients have questioned the supposed “highly tuned” claims, and don’t report any more value than they would have otherwise achieved by buying the parts on their own.

10. IBM Seems to be Preparing to Sell is Services Business.  Like IBM jettisoned the PC business years ago, citing a highly commoditized market and the inability to make enough profit, IBM’s services business is under similar pressure and may be being secretly prepared for sale.  Feedback from insiders suggests that the cuts are so deep in recent months, that there is really no other viable explanation other than the services business is being prepared for sale.  If this is true for services, it is also true for many other business units at IBM.  Will Ginni’s legacy be overseeing a garage sale of IBM businesses?  If Ginni can’t stop IBM from selling off its business units that do not drive enough bottom line profit, she will not only fail as its new CEO, she will go down in history as IBM’s worst CEO of all time.

Ginni, you have many challenges ahead of you, and we wish you all the best!  It would be great to see you turn IBM around, but that leadership starts with a strategy that’s designed to impress more than just Wall Street investors.  To this point, we have not seen much that would change our views on the top 10 points above, which makes us concerned that your leadership at IBM is “more of the same”.  Our clients could really benefit if IBM became great again, so we are hopeful you will announce a new vision for IBM that includes making great things, helping clients get great value from those things, and servicing those things extremely well.  Our clients benefit with a strong IBM in their corner, helping to deliver high value low cost solutions that result in an improved business.
UPDATE:   It seems Ginni may be failing faster than even I had predicted.  Read my recent blog on this topic:  IBM CEO Ginni Rometty:  Failing Fast
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